Collective amnesia and financial collapse
Jacobs, Mark D.
Sociology and Anthropology George Mason University Fairfax, VA, USA
In late 2007, when the Dow was at an all-time high, the financier George Soros asserted "we are in the midst of the worst financial crisis since the 1930s." As early as 2003, the legendary investor Warren Buffett had issued apocalyptic warnings that derivatives were"financial weapons of mass destruction." In the summer of 2004, former U.S. Fed chairman Paul Volcker claimed that "there's a 75 percent of a financial crisis in the next five years." All these prophecies were widely reported in the press. Although many business reporters on cable television primed the stock market and housing bubbles with their boosterism, the corps of business reporters in The New York Times and other serious newspapers soberly assessed the perilous state of the economy for years before the great crash of 2008.
Why, then, did the recent global stock market crash come as such a surprise to most financial actors and wider publics? Wall Street, Main Street, and Capitol Hill missed the clear warnings in large part for reasons of culture and cognition. Cognitive frames are both made of mnemonic stuff and provide the stuff of memory. Even though the events of 2008 recapitulate in essential respects those of 1929 and 1987, dramatic shifts in the figurative "grounding" of the very conception of "the economy" helps account for the collective amnesia that contributed to the crash of 2008.